Wednesday, February 2, 2011

Dow Sits Atop 12,000; Time for Caution?

Stocks had a very strong day, with the S&P busting through 1,300 and the Dow closing above 12,000, as the market recouped all its losses from Friday's sell-off. Some strong earnings reports, a good ISM number, and a calmer Egypt all contributed to today's rally. While we continue to believe things are looking up for the economy, we remain cautious on stocks in the near term given the strong run-up they've had over the past few months and the overall bullish sentiment that is out there.

The Uranium Stocks Index was the top performing tickerspy Index on the day, led by Uranium Energy (AMEX: UEC - News) with a 10% gain. The Contract Research Outsourcing Stocks Index was the day's worst performing tickerspy Index, with Parexel Internation (Nasdaq: PRXL - News) down -10%.

Stocks climbed on the day, with the Dow rising 148 points to 12,040. The S&P jumped 21 points to 1,308, while the Nasdaq soared 51 points to 1,308. Oil fell -$1.42 to $90.77 a barrel, while gold rose $5.80 to $1,340.30 an ounce.

In economic news, the Institute for Supply Management said its January manufacturing index rose to 60.8% from 58.5% in December, the best reading in over six years. ISM said the employment index jumped to 61.7% in January from 58.9% in December while new orders increased to 67.8% from 62% in December.

In earnings news, United Parcel Service (NYSE: UPS - News) shares rose 4.2% after the world's largest package delivery firm said its fourth-quarter profit rose 48% to $1.12 billion, or $1.11 per share, from $757 million, or 75 cents a share, a year earlier. Revenue jumped 8% to $13.42 billion. Analysts were expecting a profit of $1.05 a share on revenue of $13.32 billion. For 2011, UPS expects its profits to rise 16%-22% to $4.12-$4.35 a share. Analysts were forecasting a profit of $4.19. Nearly 80 pros held UPS in their portfolios at the end of the third quarter, and almost 500 tickerspy members own the stock in their portfolios. (more)

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